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Case Note—Judgment of the Bundesgerichtshof (Federal Court of Justice of Germany) of 22 March 2011: Passion to Inform—BGH Expands Banks' Advisory Duties

Published online by Cambridge University Press:  06 March 2019

Jean David Jansen

Abstract

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In February 2011, a Bundesgerichtshof [BGH—Federal Court of Justice] decision caused a great media echo. The court convicted Germany's largest bank to pay about half a million Euros in damages for the breach of advisory duties. In the aftermath of the financial crisis, banking law evolved fast in German courts. The recent decision raises new questions concerning the advisory duties of a bank, when offering financial products to its clients. The article gives an insight to various factual backgrounds, which, as financial products of today, are somewhat complex. Another interesting aspect to this case is that there are numerous decisions of lower courts that dealt with the same product as the BGH did. The ruling is considered to be far-reaching and groundbreaking. This case note will look into the question how far this is true.

Type
Developments
Information
German Law Journal , Volume 12 , Issue 7 , 01 July 2011 , pp. 1492 - 1509
Copyright
Copyright © 2011 by German Law Journal GbR 

References

1 See Bundesgerichtshof [BGH- Federal Court of Justice], Reference Number (Ref. No.) XI ZR 33/10 (Mar. 22, 2011), available at: http://juris.bundesgerichtshof.de/cgibin/rechtsprechung/document.py?Gericht=bgh&Art=pm&Datum=2011&Sort=3&nr=55748&linked=urt&Blank=1&file=dokument.pdf (last accessed: 4 July 2011).Google Scholar

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18 See OLG Bamberg, Reference No. 4 U 92/08, at margin numbers 24, 111 (May 11, 2009); Köndgen & Sandmann, , supra note 8, at 78; An alternate view is presented here: Reinhold Roller, Thomas Elster & Jan Christoph Knappe, Spread-abhängige (Spread Dependent) Constant Maturity (CMS) Swaps 5 ZBB 345, 347 (2007) are of the opinion that the name is based on the strike's decrease during the contract duration.Google Scholar

19 See OLG Stuttgart 9 U 164/08, supra note 3; BKR, supra note 15, at 208, 213; see also Köndgen & Sandmann, supra note 8, at 80-81, who give an example for such a scenario.Google Scholar

20 See OLG Celle, supra note 3, at margin number 41; OLG Frankfurt 23 U 230/08, supra note 3, at margin number 67.Google Scholar

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24 Id. at margin number 72.Google Scholar

25 Id. at 23.Google Scholar

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27 See, similarly deciding, OLG Koblenz, supra note 3, at margin number 49.Google Scholar

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33 Formerly codified in § 31 (2) S. 1. No. 1 WpHG (Securities Trading Act).Google Scholar

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35 See BGH, Ref. No. IX ZR 56/05 (Dec. 19, 2006), 60 NJW 1876, 1878 (2007).Google Scholar

36 See BGH, supra note 1, at margin number 17; See, for these aspects in detail: Köndgen & Sandmann, supra note 8, at 88-93; See Reinhold Roller et. al., supra note 17, at 360-362.Google Scholar

37 See BGH, supra note 1, at margin number 26.Google Scholar

38 Id. at margin number 25.Google Scholar

39 Id. at margin number 29.Google Scholar

40 Id. Google Scholar

41 Id. Google Scholar

42 See OLG Koblenz, supra note 3, at margin number 59.Google Scholar

43 See OLG Hamm, supra note 3, at margin number 87.Google Scholar

44 See OLG Frankfurt 23 U 230/08, supra note 3, at margin numbers 63-64.Google Scholar

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46 See Klöhn, Lars, Untitled Case Note, 32 ZIP 762, 764 (2011).Google Scholar

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48 Id. at margin number 31.Google Scholar

49 Id. at margin number 81; see also OLG Frankfurt 23 U 175/08, supra note 3.Google Scholar

50 See BGH, supra note 1, at margin number 35.Google Scholar

51 Id. Google Scholar

52 Id. at margin number 36.Google Scholar

53 Id. Google Scholar

54 Id. at margin number 37.Google Scholar

55 Id. at margin number 38.Google Scholar

56 Id. at margin number 47.Google Scholar

57 See Mathias Habersack, Münchener Kommentar zum (Munich Commentary) BGB § 762, at margin number 7 (Kurt Rebmann et. al., eds., 2009).Google Scholar

58 See Lars Klöhn, supra note 45, at 762, who similarly asks whether the rule that an advisory contract is conclusively closed is still appropriate, if the bank is required to subordinate its own interest to the customer's.Google Scholar

59 In all cases concerning the liability for investment advisory, the jurisdiction assumes that the investor would have made the right decision if he was informed diligently.Google Scholar

60 See BGH, supra note 1, at margin number 41.Google Scholar

61 See BGH, supra note 1, at margin number 40 (with further references).Google Scholar

62 See Bamberger, Heinz Georg, supra note 28, § 50 at margin number 7.Google Scholar

63 With a similar argument, see LG Frankfurt/Main, Ref. No. 2-19 O 435/09 (Oct. 25, 2010), 11 BKR 169, 172 (2011).Google Scholar

64 LG Frankfurt/Main 2-19 O 435/09, supra note 62.Google Scholar

65 See this article, at Section E. II.Google Scholar

66 See the decisions referred to in note 33.Google Scholar

67 See BGH, supra note 1, at margin number 38; BGH Ref. No. III ZR 196/09 (Apr. 15, 2010), 31 ZIP 919-921, at margin number 12 (2010).Google Scholar

68 See BGH, supra note 34, at margin number 13.Google Scholar

69 See BGH, supra note 1, margin number 38.Google Scholar

70 Id. Google Scholar

71 See Klöhn, Lars, supra note 45, at 762, 763.Google Scholar

72 See Lieder, Jan, supra note 44; Thomas M.J. Möllers & Kernchen, Eva, Information Overload am Kapitalmarkt (Information Overload on Capital Markets), 40 Zeitschrift für Unternehmens- und Gesellschaftsrecht (ZGR) 1-26 (2011).Google Scholar